What The Cbo Report Doesn't Say

February 10, 1994

Depending on which side is asked, the Congressional Budget Office evaluation of the Clinton health care plan amounts to a ringing confirmation of the administration's forecasts. . . or a stinging rebuke.

It is neither.

Rather, the non-partisan CBO has delivered to Congress a decidedly mixed review.

Yes, the Clinton plan would reduce health care spending below levels that otherwise would occur; and yes, those savings eventually-by the year 2004-would help cut the federal budget deficit.

But no, the plan would not reduce the deficit by as much, or as soon, as the president has promised. It seems the White House underestimated by 15 percent how much it will cost to purchase comprehensive health insurance coverage for everyone. So the government's cumulative health spending deficit will increase by $74 billion through the year 2000, not shrink by $59 billion as the president has claimed.

This $133 billion difference of opinion is nothing to wink at, but neither is it by itself a repudiation of Clinton's plan. He's hardly the first president to oversell a program's benefits while lowballing the cost.

Nor should fair-minded observers throw up their hands at CBO director Robert D. Reischauer's recommendation that all spending under the plan be considered part of the federal budget, including premiums paid by employers and employees. Clinton-bashers can bellow all they want that this makes all future spending on health care a massive tax increase. It does not.

It was predictable that both sides would try to twist the findings in their favor, but the CBO study also fosters its own distortions, albeit unintentional ones. A straightforward appraisal of the Clinton health plan's fiscal effects, it does not challenge core assumptions that ought to give pause to accountants and non-accountants alike.

For instance, CBO assumes for accounting purposes that the plan's federally enforced premium caps would be "completely effective," even though it admits the consequences of such price controls would be "highly uncertain."

Does that mean rationing? Or long lines? Or the emergence of medical "black markets" to serve those denied treatment deemed too expensive by income-limited insurance plans?

Nor does CBO question the wisdom of forcing employers to choose between buying insurance or firing workers; or of creating huge new federal and state bureaucracies to make sure everyone toes the line.

Congress needs to question those assumptions in the president's plan, and to craft a more reasonable alternative.